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House Republican Unemployment Insurance Proposal Acts As If Economic Slump Is Over

BY

House Republicans must think the job market is improving rapidly and that the Congressional Budget Office is way off base in projecting that the unemployment rate will average 8.7 percent in 2011 and 2012. How else can one explain their proposal to slash federal emergency unemployment insurance (UI) benefits?

The House Republican proposal — part of their larger proposal to extend the payroll tax cut and UI benefits — would slash, by 40, the number of weeks potentially available to unemployed workers who are struggling to find a job in some states that were hit the hardest by the jobs slump (see map). That greatly raises the risk that unemployed workers will run out of UI benefits before they find another job, imposing even greater hardship on them and their families. It also reduces the amount of support that UI — one of our highest-bang-for-the-buck stimulus programs — can provide for the struggling recovery. And, to add insult to injury, the Republican proposal contains onerous requirements on qualified UI applicants, such as drug tests and requirements to hold or be working toward a GED, that would make it harder for them to receive benefits at all.

Current policy provides an unprecedented amount of federal emergency UI because this is an unprecedented economic slump. Two-fifths of the unemployed have been looking for work for more than 26 weeks, which is the maximum number of weeks of regular UI available in most states. At no time in the last 60 years (before the current downturn) has the share of the unemployed who have been out of work this long been this high. Pew Economic Policy Group research indicates that more than half of the long-term unemployed have been searching for work for more than a year.

Under the Republican proposal, workers who exhaust their 26 weeks of regular UI early next year would be eligible for up to 20 additional weeks of federal emergency UI in all states. In states with an unemployment rate of 6 percent or higher, there would be up to another 13 weeks available, but in most of them that would be it. Many unemployed workers now receiving emergency federal benefits would experience a premature cutoff next year compared with current policy. The biggest cuts would come in states with the highest unemployment rates.

Continuing current federal UI policy into 2012 would provide $45 billion of support for a recovery that’s still struggling to gain traction. The Republican UI proposal would provide over $10 billion less support for the recovery and impose needless hardship on the long-term unemployed who are struggling to find a job in an economy in which there are still four times as many people looking for work as there are job openings.

We can only wish we had a job market that was improving so fast that the Republican policy made sense.

Here’s more information about that proposal for our wonkier readers:

The Republican proposal maintains the 20-week first tier of Emergency Unemployment Compensation (EUC) available in all states, replaces the 14-week second tier available in all states with a 13-week second tier available only in states with an unemployment rate above 6 percent, and eliminates the third and fourth tiers of 13 weeks in states with an unemployment rate of 6 percent or higher and 6 weeks in states with an unemployment rate of 8.5 percent or higher, respectively. It continues the policy of allowing states to adopt a three-year “lookback” for the Extended Benefits (EB) program. However, a four-year lookback is necessary to prevent EB from triggering off in most states over the course of 2012, causing states to lose either 13 or 20 weeks of EB depending on their particular circumstances.